The Chancellor of the Exchequer, Alistair Darling, announced his 2008 pre-budget report to the House of Commons on 24th November. In it he unveiled a £1.8bn package to kick-start the housing market but many experts say that there was little in the report to restart this ailing sector of the economy.

The lack of affordable home loans is clearly having a massively negative effect on the current market. According to the Crosby report into mortgage finance, the former boss of HBOS says that the lack of affordable home loans could send the housing market into a slump deeper than even the gloomiest predictions have indicated; “I believe new net lending is likely to fall below zero in 2009 (compared to £40bn this year and £108bn in 2007) with only a modest recovery likely in 2010. No net new mortgage lending across a full calendar year would be unprecedented and is likely to be associated with further weakness in consumer spending and an increase in unemployment” he stated.

Sir James is also calling for a government boost (of around another £100bn of taxpayers money) to the supply of funds to the banks by guaranteeing mortgage-backed securities issued by these institutions. The Chancellor indicated that he would need European Commission consent to back these proposals, effectively putting them on the back burner until the spring – a move that was called outrageous by senior mortgage brokers.

With repossession figures at a nine-year high, the chancellor said that he wanted to help families stay in their homes. He stated that homeowners must be given at least three months grace by their lender to “find a solution”. In reality, this is nothing new; most lenders (such as Nationwide) already wait three months before initiating repossession proceedings. The government is also extending its £200m scheme to help up to 6,000 of the most vulnerable homeowners by allowing them to sell their home to a housing association, in order to rent it back at an affordable level.

Another measure introduced to try and help families struggling to pay their home loans was the shortening of the period between redundancy and income support for mortgage interest benefit being payable. From April the benefit will be payable after 13 weeks (down from 39 weeks) of unemployment on the first £200,000 of the mortgage (up from £100,000).

Darling is also bringing forward an extra £775m for the coming year, to invest in social housing and regeneration projects but he has been criticised for doing little to help first time buyers who are being restricted by high deposit requirements and high moving costs. The year-long stamp duty exemption for properties of £175,000 and below will still be ending in September 2009, despite calls for it to be extended and upped to £250,000. The Chancellor has acted on the advice of the Royal Institute of Chartered Surveyors (RICS) by introducing a tax-free savings scheme in which first-time buyers can build up a deposit. However, this amounts to little more than an ISA with a different name and young earners are about to be hit by an increase in National Insurance contributions.